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Vertical perspective Process Definition and Functions
The AP/CD process is an interacting structure of people, equipment, methods, and control designed to accomplish the following primary functions: - Handle the repetitive work routines of the accounts payable department and the cashier - Support the decision needs of those who manage the accounts payable department and cashier - Assist in the preparation of internal and external reports. A Horizontal Perspective 1.Invoice received from vendor 2.Invoice notice sent to general ledger 3.Approved voucher sent to cashier and to general ledger 4.Payment sent to vendor by cashier, paid voucher returned to the accounts payable department, payment notice sent to the general ledger
AP/CD Process Information Flows:
1. The invoice is received, in the accounts payable department, from the vendor.
2. The AP department sends a notice to the general ledger indicating an invoice has been received and recorded, so the general ledger account may be updated.
3a The AP department sends a payment request (approved voucher) to the cashier to initiate the cash disbursement.
3b The AP department sends a notice to the general ledger to indicate a payment is pending (this will later be matched with the actual payment).
4a The cash disbursement is made by the cashier; a payment, in the form of a check, is sent to the vendor.
4b The cashier sends a payment notice to the AP department, indicating a payment has been made and the invoice may be closed.
4c The cashier sends a notice to the general ledger to indicate a payment has been made. The general ledger matches the payment notice with the pending payment notice (3b) so the general ledger accounts - cash, accounts payable and possibly discounts taken - may be updated.
Recommended Control Plans:
Control plans that are particular to the AP/CD business process:
- Independent validation of vendor invoices
- Match invoice with purchase order and receiving report
- Independent authorization to make payment
- Reconcile bank account
Vertical perspective
Process Definition and Functions
The AP/CD process is an interacting structure of people, equipment, methods, and control designed to accomplish the following primary functions:
- Handle the repetitive work routines of the accounts payable department and the cashier
- Support the decision needs of those who manage the accounts payable department and cashier
- Assist in the preparation of internal and external reports.
A Horizontal Perspective
1. Invoice received from vendor
2. Invoice notice sent to general ledger
3. Approved voucher sent to cashier and to general ledger
4. Payment sent to vendor by cashier, paid voucher returned to the accounts payable department, payment notice sent to the general ledger
AP/CD Process Information Flows:
1. The invoice is received, in the accounts payable department, from the vendor.
2. The AP department sends a notice to the general ledger indicating an invoice has been received and recorded, so the general ledger account may be updated.
3a The AP department sends a payment request (approved voucher) to the cashier to initiate the cash disbursement.
3b The AP department sends a notice to the general ledger to indicate a payment is pending (this will later be matched with the actual payment).
4a The cash disbursement is made by the cashier; a payment, in the form of a check, is sent to the vendor.
4b The cashier sends a payment notice to the AP department, indicating a payment has been made and the invoice may be closed.
4c The cashier sends a notice to the general ledger to indicate a payment has been made. The general ledger matches the payment notice with the pending payment notice (3b) so the general ledger accounts - cash, accounts payable and possibly discounts taken - may be updated.
Recommended Control Plans:
Control plans that are particular to the AP/CD business process:
- Independent validation of vendor invoices
- Match invoice with purchase order and receiving report
- Independent authorization to make payment
- Reconcile bank account